In an important decision from the Federal Court for the District of Oregon, a court has denied attorney’s fees to a successful copyright litigant because the court ruled that in this instance the award did not further the purposes of the Copyright Act. The lawsuit involves the pervasive litigation filed by porn companies against folks who downloaded their movies over the Internet. Usually an adult film company hires one of a handful of copyright trolling lawyers who handle these massive claims and then seek to extract (or I as I say extort) settlements from folks who can’t afford a lawyer or who are embarrassed to be sued over downloading porn or who simply have no clue how to defend the case so paying $2,000 or so seems like a logical resolution.
Here, however, Cobbler Nevada Inc,. the porn producer, ran into Santos Cerritos, the downloading defendant, who retained Thomas Freedman of Pearl Law in Portland, Oregon. Together they mounted a simple defense based on the value of the claim. In the end, the successful management of the claim led to the court denying attorney’s fees. The decision has far-ranging ramifications as copyright trolling is not just for porn. Over the past eight years, my office has represented 3,000+ businesses in claims brought by Getty Images and other digital image warehouses for folks using one of their digital images in a blog post or on their website. We have handled similar trolling cases over the use of a poem called “The Dash;” bars and restaurants playing live or recorded music; and even fought lawsuits over the unlicensed use of clip-art. In most of these cases, the defendants did in fact use the work without permission, so liability is not an issue. The main thrust of all of these claims is that in addition to whatever the infringement is worth, the loser will face paying the legal fees of the copyright holder as under the Copyright Law, attorney’s fees are usually awarded to a prevailing plaintiff.
So why did the court refuse to award them in this case. First of all, the lawyer for the porno producer Carl Crowell has faced judicial scrutiny before. He was denied legal fees in another film downloading case recently and the court there noted that he has brought these lawsuits against folks on Social Security Disability and even against a foster home where there was no proof of who downloaded the film. Second of all his conduct in this case did not help his cause: he served the defendant even though his counsel would have accepted service on his behalf thereby avoiding process server fees; he turned down fair offers of judgment even after the defendant proved his indigency by turning over financial records; and he continued to serve discovery demands and motions even though the defendant had admitted liability and the court had frozen discovery while settlement talks were ongoing. The other factors in denying the fees was that the defendant and his counsel admitted liability (limiting discovery as I stated); made several offers of settlement in writing; and always focused the court’s attention on the minimal impact this infringement had on the plaintiff and the world at large. So when Crowell sought $17,400 in legal fees when he received only the statutory minimum award of $750, the court decided to make a statement. The result of this clash of styles of lawyering was a decision that had many elements that will be used by others (including myself) as they fight these plagues on the court system. I will give you a smattering of some of the most important language in the court decision (a link to the full opinion is at the bottom of the article).
1. “We do not believe Congress intended that the prevailing plaintiff should be awarded attorney’s fees in every case.”
2. “The Supreme Court noted that a court may also consider the need to “deter . . . overaggressive assertions of copyright claims.'”
3. The most important factor in determining whether to award fees under the Copyright Act, is whether an award will further the purposes of the Act and the primary purpose of the Act is to “encourage the production of original literary, artistic, and musical expression for the good of the public.” (Meaning its primary purpose is not to produce infringement awards).
4. The court noted that $17,346 in fees to get an award of $750 is excessive.
5. The court noted that stopping one infringer when thousands have illegally downloaded the same film is a de minimus (minor) success.
6. While the court certainly understands the need to protect and enforce one’s copyright, making an infringer pay $750 in statutory penalties plus $525 is a sufficient deterrent in this case.
7. An award attorney’s fees should be given only if doing so will further the purposes of the Copyright Act. In these mass copyright cases, the threat of fee-shifting has emboldened Plaintiff’s counsel to demand thousands of dollars to settle a claim, even where the infringing defendant admits early in the case that he illegally downloaded the movie.
8. The threat of fee-shifting in these cases has created an unjust scenario in this and other districts, in which enterprising plaintiffs’ counsel can demand thousands of dollars to settle these cases before the infringer is even named as a defendant, because the cost of federal litigation is prohibitive (for one party, let alone paying for both parties’ attorney’s fees). A startling number of [target defendants] are failing to show up for Rule 45 depositions, and alleged infringers are more often than not choosing default judgments over litigation. By allowing this scenario to occur for several years now, the federal courts are not assisting in the administration of justice, but are instead enabling plaintiffs’ counsel and their LLC clients to receive a financial windfall by exploiting copyright law.
9. When an individual who has illegally downloaded a movie is contacted by Plaintiff’s counsel, and faces the threat of a statutory damage award that could theoretically reach $150,000 (see 17 U.S.C. § 504(c)(2)), as well as the threat of a substantial fee award, the resulting bargaining process is unequal, and unfair. For this Court to award Plaintiff its attorney’s fees in this case would only contribute to the continued overaggressive assertion and negotiation of these Copyright Act claims.
The last two paragraphs are music to my ears as they summarizes why I call these trolling campaigns “legalized extortion.” Hopefully, the tide is turning against these lawsuits. The potent weapon of attorney’s fees needs to be taken away from the trolls. We need courts around the country to follow suit and recognize that the Copyright Act’s allowing of attorney’s fees should only be applied where it will further the purpose of the Act and should not be used as a threat to make minor infringers pay exorbitant penalties far in excess of the damages sustained.
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